If you make less than $47,476.00, you may be entitled to a substantial amount of unpaid overtime by your employer due to a change in California and federal employment law.

For legal background, there are two employee classifications in California: exemptemployees and non-exemptemployees.

Exempt employees are not entitled to overtime for any hours worked in excess of eight hours per day or 40 hours per week, meal breaks every five hours, rest breaks every four hours, and other protections. A non-exempt employee could work 100 hours per week and not be entitled to anything but their regular salary (ie. $60,000 per year). A properly classified non-exempt employee must be paid a minimum salary of $47,476 beginning December 1, 2016, and must spend 51% of their time performing non-exempt job duties, such as supervising of other employees or perform high-level office work, like accounting or human resources.

Non-exempt employees are entitledto overtime, breaks, and many other protections. For example, a non-exempt employee would be entitled to 20 hours at 1.5 times their regularly hourly rate if they worked 60 hours per week. Statistically, most employees are non-exempt, even employees that spend some time managing other workers or who perform non-manual office work.

Employers regularly misclassify employees as “exempt” to avoid rigorous obligations to pay overtime and provide breaks. However, there is a common misperception among workers and employers that an employer simply needs to pay an employee a flat salary, rather than an hourly wage, in order to classify an employee as “exempt” from overtime. Payment of a salary rather than an hourly wage is just oneof many factors in determining whether an employee is properly classified.

Moreover, beginning December 1, 2016, all exempt employees must be paid a minimum salary of $47,476in order to be properly classified as exempt. This means that any worker paid under $47,476 must be paid overtime and be provided with rest breaks beginning December 1, 2016.

The new law means that many exempt employees will be getting a pay raise to $47,476 or more beginning December 1, 2016, or will be converted to hourly-paid employees. However, many employers may not change their policies in light of the new law.

Employers and employees frequently believe that if the employee is paid a salary, the employee is automatically disqualified from overtime. This is not the legal case at all.

For legal background, there are two methods of paying an employee. One is by salary, typically paid every two weeks, resulting in a set amount paid per year (ex: $60,000). The other is “hourly” where the employee is paid a wage for every hour worked (ex: $15.00 per hour).

Next, employees are placed into two legal categories or “classifications”. The first classification is called “non-exempt”. A non-exempt employee isentitled to time-and-a-half for any hours worked in excess of eight per day or forty per week and other protections. The second employee classification is called “exempt”. Exempt employees are not entitled to overtime. If a properly classified exempt employee works 60 hours per week, they are not entitled to an additional twenty hours of overtime pay.

The process of properly classifying employees as “exempt” or “non-exempt” can be legally and factually intensive. It depends on a variety of factors. Most important is the employee’s actual job duties and what the employee spent 51% or more of their time at work doing. Other factors include the employee’s level of responsibility, the amount of discretion given to the employee to perform their job, whether the employee performs manual labor, and whether the employee manages others. One factor is whether the employee is paid hourly or by salary.

Employers often oversimplify the process and only look at the salary requirement, and ignore the other factors when classifying employees.

As an illustration, let’s take the case of Ann. Ann is 5-year assistant manager at the Santa Cruz grocery store, Veggies-R-Us. Ann makes a salary of $45,000. Even though Ann averages 12 hours per day and 60 hours per week, she is not paid any overtime.

Ann spends the majority of her day stocking the shelves at Veggies-R-Us and working as a cashier. Ann’s job as an assistant manager requires her to supervise lower-level employees, which takes about 20% of her overall time. However, Ann has no authority or input in the hiring and firing process of the employees she supervises. One day, Ann is fired on the mistaken belief that she stole a box of broccoli. Ann then calls a lawyer complaining of wrongful termination.

Ann would not have a case for wrongful termination. (See my other article “What is Wrongful Termination?”). However, Ann would have a great case for employee misclassification and for unpaid overtime.

Ann spent more than 51% of her time stocking shelves and working as a cashier, both non-exempt activities under the California Labor Code. Only a fraction of her overall time was spent supervising other employees. Additionally, Ann did not have any true discretion or “independent judgment” over how lower-level employees were hired or fired.

While it’s true that Ann’s job title is that of “assistant store manager”, job titles are irrelevant in determining employee-classification and whether overtime is owed. Ann was not a true manager.

Veggies-R-Us will correctly argue that Ann was a “salaried employee”. However, paying Ann on a salaried basis is just one of many factors in determining Ann’s correct classification. Ann does not fall within any of California’s recognized exempt classifications.

Ann has a great case for overtime. She is entitled for up to three-years’ overtime (time-and-a-half) going back three years. That would be about $32.00 per hour for each hour of overtime worked, or $96,000 for the last three years. Ann is also entitled to a host of penalties, money for missed rest and meal breaks, interest on unpaid overtime. Ann has a case in excess of $125,000.

Are you a Monterey, Salinas, or Santa Cruz County employee like Ann who works long hours but receives no overtime pay? Contact the Law Office of Brian Mathias for a consultation.